SMART COMMUNICATIONS, INC. (SMART) and PILIPINO TELEPHONE CORPORATION (PILTEL), petitioners, vs. NATIONAL TELECOMMUNICATIONS COMMISSION (NTC), respondent.

FIRST DIVISION

G.R. No. 151908            August 12, 2003
SMART COMMUNICATIONS, INC. (SMART) and PILIPINO TELEPHONE CORPORATION (PILTEL), petitioners,
vs.
NATIONAL TELECOMMUNICATIONS COMMISSION (NTC), respondent.
x---------------------------------------------------------x
G.R. No. 152063 August 12, 2003
GLOBE TELECOM, INC. (GLOBE) and ISLA COMMUNICATIONS CO., INC. (ISLACOM), petitioners,
vs.
COURT OF APPEALS (The Former 6th Division) and the NATIONAL TELECOMMUNICATIONS COMMISSION, respondents.

YNARES-SANTIAGO, J.:

Pursuant to its rule-making and regulatory powers, the National Telecommunications Commission (NTC) issued on June 16, 2000 Memorandum Circular No. 13-6-2000, promulgating rules and regulations on the billing of telecommunications services. Among its pertinent provisions are the following:

(1) The billing statements shall be received by the subscriber of the telephone service not later than 30 days from the end of each billing cycle. In case the statement is received beyond this period, the subscriber shall have a specified grace period within which to pay the bill and the public telecommunications entity (PTEs) shall not be allowed to disconnect the service within the grace period.

(2) There shall be no charge for calls that are diverted to a voice mailbox, voice prompt, recorded message or similar facility excluding the customer's own equipment.

(3) PTEs shall verify the identification and address of each purchaser of prepaid SIM cards. Prepaid call cards and SIM cards shall be valid for at least 2 years from the date of first use. Holders of prepaid SIM cards shall be given 45 days from the date the prepaid SIM card is fully consumed but not beyond 2 years and 45 days from date of first use to replenish the SIM card, otherwise the SIM card shall be rendered invalid. The validity of an invalid SIM card, however, shall be installed upon request of the customer at no additional charge except the presentation of a valid prepaid call card.

(4) Subscribers shall be updated of the remaining value of their cards before the start of every call using the cards.

(5) The unit of billing for the cellular mobile telephone service whether postpaid or prepaid shall be reduced from 1 minute per pulse to 6 seconds per pulse. The authorized rates per minute shall thus be divided by 10.¹

The Memorandum Circular provided that it shall take effect 15 days after its publication in a newspaper of general circulation and three certified true copies thereof furnished the UP Law Center. It was published in the newspaper, The Philippine Star, on June 22, 2000.² Meanwhile, the provisions of the Memorandum Circular pertaining to the sale and use of prepaid cards and the unit of billing for cellular mobile telephone service took effect 90 days from the effectivity of the Memorandum Circular.

On August 30, 2000, the NTC issued a Memorandum to all cellular mobile telephone service (CMTS) operators which contained measures to minimize if not totally eliminate the incidence of stealing of cellular phone units. The Memorandum directed CMTS operators to:

a. strictly comply with Section B(1) of MC 13-6-2000 requiring the presentation and verification of the identity and addresses of prepaid SIM card customers;

b. require all your respective prepaid SIM cards dealers to comply with Section B(1) of MC 13-6-2000;

c. deny acceptance to your respective networks prepaid and/or postpaid customers using stolen cellphone units or cellphone units registered to somebody other than the applicant when properly informed of all information relative to the stolen cellphone units;

d. share all necessary information of stolen cellphone units to all other CMTS operators in order to prevent the use of stolen cellphone units; and

e. require all your existing prepaid SIM card customers to register and present valid identification cards.³

This was followed by another Memorandum dated October 6, 2000 addressed to all public telecommunications entities, which reads:

This is to remind you that the validity of all prepaid cards sold on 07 October 2000 and beyond shall be valid for at least two (2) years from date of first use pursuant to MC 13-6-2000.

In addition, all CMTS operators are reminded that all SIM packs used by subscribers of prepaid cards sold on 07 October 2000 and beyond shall be valid for at least two (2) years from date of first use. Also, the billing unit shall be on a six (6) seconds pulse effective 07 October 2000.

For strict compliance.⁴

On October 20, 2000, petitioners Isla Communications Co., Inc. and Pilipino Telephone Corporation filed against the National Telecommunications Commission, Commissioner Joseph A. Santiago, Deputy Commissioner Aurelio M. Umali and Deputy Commissioner Nestor C. Dacanay, an action for declaration of nullity of NTC Memorandum Circular No. 13-6-2000 (the Billing Circular) and the NTC Memorandum dated October 6, 2000, with prayer for the issuance of a writ of preliminary injunction and temporary restraining order. The complaint was docketed as Civil Case No. Q-00-42221 at the Regional Trial Court of Quezon City, Branch 77.⁵

Petitioners Islacom and Piltel alleged, inter alia, that the NTC has no jurisdiction to regulate the sale of consumer goods such as the prepaid call cards since such jurisdiction belongs to the Department of Trade and Industry under the Consumer Act of the Philippines; that the Billing Circular is oppressive, confiscatory and violative of the constitutional prohibition against deprivation of property without due process of law; that the Circular will result in the impairment of the viability of the prepaid cellular service by unduly prolonging the validity and expiration of the prepaid SIM and call cards; and that the requirements of identification of prepaid card buyers and call balance announcement are unreasonable. Hence, they prayed that the Billing Circular be declared null and void ab initio.

Soon thereafter, petitioners Globe Telecom, Inc and Smart Communications, Inc. filed a joint Motion for Leave to Intervene and to Admit Complaint-in-Intervention.⁶ This was granted by the trial court.

On October 27, 2000, the trial court issued a temporary restraining order enjoining the NTC from implementing Memorandum Circular No. 13-6-2000 and the Memorandum dated October 6, 2000.⁷

In the meantime, respondent NTC and its co-defendants filed a motion to dismiss the case on the ground of petitioners' failure to exhaust administrative remedies.

Subsequently, after hearing petitioners' application for preliminary injunction as well as respondent's motion to dismiss, the trial court issued on November 20, 2000 an Order, the dispositive portion of which reads:

WHEREFORE, premises considered, the defendants' motion to dismiss is hereby denied for lack of merit. The plaintiffs' application for the issuance of a writ of preliminary injunction is hereby granted. Accordingly, the defendants are hereby enjoined from implementing NTC Memorandum Circular 13-6-2000 and the NTC Memorandum, dated October 6, 2000, pending the issuance and finality of the decision in this case. The plaintiffs and intervenors are, however, required to file a bond in the sum of FIVE HUNDRED THOUSAND PESOS (P500,000.00), Philippine currency.

SO ORDERED.⁸

Defendants filed a motion for reconsideration, which was denied in an Order dated February 1, 2001.⁹

Respondent NTC thus filed a special civil action for certiorari and prohibition with the Court of Appeals, which was docketed as CA-G.R. SP. No. 64274. On October 9, 2001, a decision was rendered, the decretal portion of which reads:

WHEREFORE, premises considered, the instant petition for certiorari and prohibition is GRANTED, in that, the order of the court a quo denying the petitioner's motion to dismiss as well as the order of the court a quo granting the private respondents' prayer for a writ of preliminary injunction, and the writ of preliminary injunction issued thereby, are hereby ANNULLED and SET ASIDE. The private respondents' complaint and complaint-in-intervention below are hereby DISMISSED, without prejudice to the referral of the private respondents' grievances and disputes on the assailed issuances of the NTC with the said agency.

SO ORDERED.¹⁰

Petitioners' motions for reconsideration were denied in a Resolution dated January 10, 2002 for lack of merit.¹¹

Hence, the instant petition for review filed by Smart and Piltel, which was docketed as G.R. No. 151908, anchored on the following grounds:

A.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE NATIONAL TELECOMMUNICATIONS COMMISSION (NTC) AND NOT THE REGULAR COURTS HAS JURISDICTION OVER THE CASE.

B.

THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN HOLDING THAT THE PRIVATE RESPONDENTS FAILED TO EXHAUST AN AVAILABLE ADMINISTRATIVE REMEDY.

C.

THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BILLING CIRCULAR ISSUED BY THE RESPONDENT NTC IS UNCONSTITUTIONAL AND CONTRARY TO LAW AND PUBLIC POLICY.

D.

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PRIVATE RESPONDENTS FAILED TO SHOW THEIR CLEAR POSITIVE RIGHT TO WARRANT THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION.¹²

Likewise, Globe and Islacom filed a petition for review, docketed as G.R. No. 152063, assigning the following errors:

1. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINES OF PRIMARY JURISDICTION AND EXHAUSTION OF ADMINISTRATIVE REMEDIES DO NOT APPLY SINCE THE INSTANT CASE IS FOR LEGAL NULLIFICATION (BECAUSE OF LEGAL INFIRMITIES AND VIOLATIONS OF LAW) OF A PURELY ADMINISTRATIVE REGULATION PROMULGATED BY AN AGENCY IN THE EXERCISE OF ITS RULE MAKING POWERS AND INVOLVES ONLY QUESTIONS OF LAW.

2. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES DOES NOT APPLY WHEN THE QUESTIONS RAISED ARE PURELY LEGAL QUESTIONS.

3. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES DOES NOT APPLY WHERE THE ADMINISTRATIVE ACTION IS COMPLETE AND EFFECTIVE, WHEN THERE IS NO OTHER REMEDY, AND THE PETITIONER STANDS TO SUFFER GRAVE AND IRREPARABLE INJURY.

4. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE PETITIONERS IN FACT EXHAUSTED ALL ADMINISTRATIVE REMEDIES AVAILABLE TO THEM.

5. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED IN ISSUING ITS QUESTIONED RULINGS IN THIS CASE BECAUSE GLOBE AND ISLA HAVE A CLEAR RIGHT TO AN INJUNCTION.¹³

The two petitions were consolidated in a Resolution dated February 17, 2003.¹⁴

On March 24, 2003, the petitions were given due course and the parties were required to submit their respective memoranda.¹⁵

We find merit in the petitions.

Administrative agencies possess quasi-legislative or rule-making powers and quasi-judicial or administrative adjudicatory powers. Quasi-legislative or rule-making power is the power to make rules and regulations which results in delegated legislation that is within the confines of the granting statute and the doctrine of non-delegability and separability of powers.¹⁶

The rules and regulations that administrative agencies promulgate, which are the product of a delegated legislative power to create new and additional legal provisions that have the effect of law, should be within the scope of the statutory authority granted by the legislature to the administrative agency. It is required that the regulation be germane to the objects and purposes of the law, and be not in contradiction to, but in conformity with, the standards prescribed by law.¹⁷ They must conform to and be consistent with the provisions of the enabling statute in order for such rule or regulation to be valid. Constitutional and statutory provisions control with respect to what rules and regulations may be promulgated by an administrative body, as well as with respect to what fields are subject to regulation by it. It may not make rules and regulations which are inconsistent with the provisions of the Constitution or a statute, particularly the statute it is administering or which created it, or which are in derogation of, or defeat, the purpose of a statute. In case of conflict between a statute and an administrative order, the former must prevail.¹⁸

Not to be confused with the quasi-legislative or rule-making power of an administrative agency is its quasi-judicial or administrative adjudicatory power. This is the power to hear and determine questions of fact to which the legislative policy is to apply and to decide in accordance with the standards laid down by the law itself in enforcing and administering the same law. The administrative body exercises its quasi-judicial power when it performs in a judicial manner an act which is essentially of an executive or administrative nature, where the power to act in such manner is incidental to or reasonably necessary for the performance of the executive or administrative duty entrusted to it. In carrying out their quasi-judicial functions, the administrative officers or bodies are required to investigate facts or ascertain the existence of facts, hold hearings, weigh evidence, and draw conclusions from them as basis for their official action and exercise of discretion in a judicial nature.¹⁹

In questioning the validity or constitutionality of a rule or regulation issued by an administrative agency, a party need not exhaust administrative remedies before going to court. This principle applies only where the act of the administrative agency concerned was performed pursuant to its quasi-judicial function, and not when the assailed act pertained to its rule-making or quasi-legislative power. In Association of Philippine Coconut Dessicators v. Philippine Coconut Authority,²⁰ it was held:

The rule of requiring exhaustion of administrative remedies before a party may seek judicial review, so strenuously urged by the Solicitor General on behalf of respondent, has obviously no application here. The resolution in question was issued by the PCA in the exercise of its rule- making or legislative power. However, only judicial review of decisions of administrative agencies made in the exercise of their quasi-judicial function is subject to the exhaustion doctrine.

Even assuming arguendo that the principle of exhaustion of administrative remedies apply in this case, the records reveal that petitioners sufficiently complied with this requirement. Even during the drafting and deliberation stages leading to the issuance of Memorandum Circular No. 13-6-2000, petitioners were able to register their protests to the proposed billing guidelines. They submitted their respective position papers setting forth their objections and submitting proposed schemes for the billing circular.²¹ After the same was issued, petitioners wrote successive letters dated July 3, 2000²² and July 5, 2000,²³ asking for the suspension and reconsideration of the so-called Billing Circular. These letters were not acted upon until October 6, 2000, when respondent NTC issued the second assailed Memorandum implementing certain provisions of the Billing Circular. This was taken by petitioners as a clear denial of the requests contained in their previous letters, thus prompting them to seek judicial relief.

In like manner, the doctrine of primary jurisdiction applies only where the administrative agency exercises its quasi-judicial or adjudicatory function. Thus, in cases involving specialized disputes, the practice has been to refer the same to an administrative agency of special competence pursuant to the doctrine of primary jurisdiction. The courts will not determine a controversy involving a question which is within the jurisdiction of the administrative tribunal prior to the resolution of that question by the administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the premises of the regulatory statute administered. The objective of the doctrine of primary jurisdiction is to guide a court in determining whether it should refrain from exercising its jurisdiction until after an administrative agency has determined some question or some aspect of some question arising in the proceeding before the court. It applies where the claim is originally cognizable in the courts and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, has been placed within the special competence of an administrative body; in such case, the judicial process is suspended pending referral of such issues to the administrative body for its view.²⁴

However, where what is assailed is the validity or constitutionality of a rule or regulation issued by the administrative agency in the performance of its quasi-legislative function, the regular courts have jurisdiction to pass upon the same. The determination of whether a specific rule or set of rules issued by an administrative agency contravenes the law or the constitution is within the jurisdiction of the regular courts. Indeed, the Constitution vests the power of judicial review or the power to declare a law, treaty, international or executive agreement, presidential decree, order, instruction, ordinance, or regulation in the courts, including the regional trial courts.²⁵ This is within the scope of judicial power, which includes the authority of the courts to determine in an appropriate action the validity of the acts of the political departments.²⁶ Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.²⁷

In the case at bar, the issuance by the NTC of Memorandum Circular No. 13-6-2000 and its Memorandum dated October 6, 2000 was pursuant to its quasi-legislative or rule-making power. As such, petitioners were justified in invoking the judicial power of the Regional Trial Court to assail the constitutionality and validity of the said issuances. In Drilon v. Lim,²⁸ it was held:

We stress at the outset that the lower court had jurisdiction to consider the constitutionality of Section 187, this authority being embraced in the general definition of the judicial power to determine what are the valid and binding laws by the criterion of their conformity to the fundamental law. Specifically, B.P. 129 vests in the regional trial courts jurisdiction over all civil cases in which the subject of the litigation is incapable of pecuniary estimation, even as the accused in a criminal action has the right to question in his defense the constitutionality of a law he is charged with violating and of the proceedings taken against him, particularly as they contravene the Bill of Rights. Moreover, Article X, Section 5(2), of the Constitution vests in the Supreme Court appellate jurisdiction over final judgments and orders of lower courts in all cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question.²⁹

In their complaint before the Regional Trial Court, petitioners averred that the Circular contravened Civil Code provisions on sales and violated the constitutional prohibition against the deprivation of property without due process of law. These are within the competence of the trial judge. Contrary to the finding of the Court of Appeals, the issues raised in the complaint do not entail highly technical matters. Rather, what is required of the judge who will resolve this issue is a basic familiarity with the workings of the cellular telephone service, including prepaid SIM and call cards – and this is judicially known to be within the knowledge of a good percentage of our population – and expertise in fundamental principles of civil law and the Constitution.

Hence, the Regional Trial Court has jurisdiction to hear and decide Civil Case No. Q-00-42221. The Court of Appeals erred in setting aside the orders of the trial court and in dismissing the case.

WHEREFORE, in view of the foregoing, the consolidated petitions are GRANTED. The decision of the Court of Appeals in CA-G.R. SP No. 64274 dated October 9, 2001 and its Resolution dated January 10, 2002 are REVERSED and SET ASIDE. The Order dated November 20, 2000 of the Regional Trial Court of Quezon City, Branch 77, in Civil Case No. Q-00-42221 is REINSTATED. This case is REMANDED to the court a quo for continuation of the proceedings.

SO ORDERED.

Davide, Jr., C.J., Vitug, and Carpio, JJ., concur.
Azcuna, J., took no part.

Footnotes

¹ Rollo, G.R. No. 151908, pp. 225-228.

² Rollo, G.R. No. 152063, p. 112.

³ Rollo, G.R. No. 151908, p. 229.

⁴ Id., p. 230.

⁵ Id., pp. 231-247.

⁶ Id., pp. 248-270.

⁷ Id., pp. 271-273, at 273; penned by Judge Vivencio S. Baclig.

⁸ Id., pp. 274-277.

⁹ Id., p. 278.

¹⁰ Id., pp. 123-132, at 131-132; penned by Associate Justice Rodrigo V. Cosico, concurred in by Associate Justices Ramon A. Barcelona and Alicia L. Santos.

¹¹ Id., pp. 134-136.

¹² Id., pp. 23-24.

¹³ Rollo, G.R. No. 152063, pp. 14-15.

¹⁴ Id., pp. 389-390.

¹⁵ Id., pp. 391-392.

¹⁶ Bellosillo, J., Separate Opinion, Commissioner of Internal Revenue v. Court of Appeals, 329 Phil. 987, 1017 [1996].

¹⁷ Romulo, Mabanta, Buenaventura, Sayoc and De Los Angeles v. Home Development Mutual Fund, G.R. No. 131082, 19 June 2000, 333 SCRA 777, 785-786.

¹⁸ Conte, et al. v. Commission on Audit, 332 Phil. 20, 36 [1996].

¹⁹ Bellosillo, J., Separate Opinion, Commissioner of Internal Revenue, G.R. No. 119761, 29 August 1996, supra.

²⁰ G.R. No. 110526, 10 February 1998, 286 SCRA 109, 117.

²¹ Rollo, G.R. No. 152063, pp. 57-78.

²² Id., pp. 79-86.

²³ Id., pp. 87-89.

²⁴ Fabia v. Court of Appeals, G.R. No. 132684, 11 September 2002.

²⁵ Spouses Mirasol v. Court of Appeals, G.R. No. 128448, 1 February 2001, 351 SCRA 44, 51.

²⁶ Santiago v. Guingona, Jr., G.R. No. 134577, 18 November 1998, 298 SCRA 756, 774.

²⁷ CONSTITUTION, Art. VIII, Sec. 1, second paragraph.

²⁸ G.R. No. 112497, 4 August 1994, 235 SCRA 135.

²⁹ Id., at 139-140.

INDUSTRIAL ENTERPRISES, INC., petitioner, vs. THE HON. COURT OF APPEALS, MARINDUQUE MINING & INDUSTRIAL CORPORATION, THE HON. GERONIMO VELASCO in his capacity as Minister of Energy and PHILIPPINE NATIONAL BANK, respondents.

SECOND DIVISION

G.R. No. 88550 April 18, 1990
INDUSTRIAL ENTERPRISES, INC., petitioner,
vs.
THE HON. COURT OF APPEALS, MARINDUQUE MINING & INDUSTRIAL CORPORATION, THE HON. GERONIMO VELASCO in his capacity as Minister of Energy and PHILIPPINE NATIONAL BANK, respondents.
Manuel M. Antonio and Dante Cortez for petitioner.
Pelaez, Adriano & Gregorio for respondent MMIC.
The Chief Legal Counsel for respondent PNB.

MELENCIO-HERRERA, J.:

This petition seeks the review and reversal of the Decision of respondent Court of Appeals in CA-G.R. CV No. 12660, ¹ which ruled adversely against petitioner herein.

Petitioner Industrial Enterprises Inc. (IEI) was granted a coal operating contract by the Government through the Bureau of Energy Development (BED) for the exploration of two coal blocks in Eastern Samar. Subsequently, IEI also applied with the then Ministry of Energy for another coal operating contract for the exploration of three additional coal blocks which, together with the original two blocks, comprised the so-called "Giporlos Area."

IEI was later on advised that in line with the objective of rationalizing the country's over-all coal supply-demand balance . . . the logical coal operator in the area should be the Marinduque Mining and Industrial Corporation (MMIC), which was already developing the coal deposit in another area (Bagacay Area) and that the Bagacay and Giporlos Areas should be awarded to MMIC (Rollo, p. 37). Thus, IEI and MMIC executed a Memorandum of Agreement whereby IEI assigned and transferred to MMIC all its rights and interests in the two coal blocks which are the subject of IEI's coal operating contract.

Subsequently, however, IEI filed an action for rescission of the Memorandum of Agreement with damages against MMIC and the then Minister of Energy Geronimo Velasco before the Regional Trial Court of Makati, Branch 150, ² alleging that MMIC took possession of the subject coal blocks even before the Memorandum of Agreement was finalized and approved by the BED; that MMIC discontinued work thereon; that MMIC failed to apply for a coal operating contract for the adjacent coal blocks; and that MMIC failed and refused to pay the reimbursements agreed upon and to assume IEI's loan obligation as provided in the Memorandum of Agreement (Rollo, p. 38). IEI also prayed that the Energy Minister be ordered to approve the return of the coal operating contract from MMIC to petitioner, with a written confirmation that said contract is valid and effective, and, in due course, to convert said contract from an exploration agreement to a development/production or exploitation contract in IEI's favor.

Respondent, Philippine National Bank (PNB), was later impleaded as co-defendant in an Amended Complaint when the latter with the Development Bank of the Philippines effected extra-judicial foreclosures on certain mortgages, particularly the Mortgage Trust Agreement, dated 13 July 1981, constituted in its favor by MMIC after the latter defaulted in its obligation totalling around P22 million as of 15 July 1984. The Court of Appeals eventually dismissed the case against the PNB (Resolution, 21 September 1989).

Strangely enough, Mr. Jesus S. Cabarrus is the President of both IEI and MMIC.

In a summary judgment, the Trial Court ordered the rescission of the Memorandum of Agreement, declared the continued efficacy of the coal operating contract in favor of IEI; ordered the reversion of the two coal blocks covered by the coal operating contract; ordered BED to issue its written affirmation of the coal operating contract and to expeditiously cause the conversion thereof from exploration to development in favor of IEI; directed BED to give due course to IEI's application for a coal operating contract; directed BED to give due course to IEI's application for three more coal blocks; and ordered the payment of damages and rehabilitation expenses (Rollo, pp. 9-10).

In reversing the Trial Court, the Court of Appeals held that the rendition of the summary judgment was not proper since there were genuine issues in controversy between the parties, and more importantly, that the Trial Court had no jurisdiction over the action considering that, under Presidential Decree No. 1206, it is the BED that has the power to decide controversies relative to the exploration, exploitation and development of coal blocks (Rollo, pp. 43-44).

Hence, this petition, to which we resolved to give due course and to decide.

Incidentally, the records disclose that during the pendency of the appeal before the Appellate Court, the suit against the then Minister of Energy was dismissed and that, in the meantime, IEI had applied with the BED for the development of certain coal blocks.

The decisive issue in this case is whether or not the civil court has jurisdiction to hear and decide the suit for rescission of the Memorandum of Agreement concerning a coal operating contract over coal blocks. A corollary question is whether or not respondent Court of Appeals erred in holding that it is the Bureau of Energy Development (BED) which has jurisdiction over said action and not the civil court.

While the action filed by IEI sought the rescission of what appears to be an ordinary civil contract cognizable by a civil court, the fact is that the Memorandum of Agreement sought to be rescinded is derived from a coal-operating contract and is inextricably tied up with the right to develop coal-bearing lands and the determination of whether or not the reversion of the coal operating contract over the subject coal blocks to IEI would be in line with the integrated national program for coal-development and with the objective of rationalizing the country's over-all coal-supply-demand balance, IEI's cause of action was not merely the rescission of a contract but the reversion or return to it of the operation of the coal blocks. Thus it was that in its Decision ordering the rescission of the Agreement, the Trial Court, inter alia, declared the continued efficacy of the coal-operating contract in IEI's favor and directed the BED to give due course to IEI's application for three (3) IEI more coal blocks. These are matters properly falling within the domain of the BED.

For the BED, as the successor to the Energy Development Board (abolished by Sec. 11, P.D. No. 1206, dated 6 October 1977) is tasked with the function of establishing a comprehensive and integrated national program for the exploration, exploitation, and development and extraction of fossil fuels, such as the country's coal resources; adopting a coal development program; regulating all activities relative thereto; and undertaking by itself or through service contracts such exploitation and development, all in the interest of an effective and coordinated development of extracted resources.

Thus, the pertinent sections of P.D. No. 1206 provide:

Sec. 6. Bureau of Energy Development. There is created in the Department a Bureau of Energy Development, hereinafter referred to in this Section as the Bureau, which shall have the following powers and functions, among others:

a. Administer a national program for the encouragement, guidance, and whenever necessary, regulation of such business activity relative to the exploration, exploitation, development, and extraction of fossil fuels such as petroleum, coal, . . .

The decisions, orders, resolutions or actions of the Bureau may be appealed to the Secretary whose decisions are final and executory unless appealed to the President. (Emphasis supplied.)

That law further provides that the powers and functions of the defunct Energy Development Board relative to the implementation of P.D. No. 972 on coal exploration and development have been transferred to the BED, provided that coal operating contracts including the transfer or assignment of interest in said contracts, shall require the approval of the Secretary (Minister) of Energy (Sec. 12, P.D. No. 1206).

Sec. 12. . . . the powers and functions transferred to the Bureau of Energy Development are:

xxx xxx xxx

ii. The following powers and functions of the Energy Development Board under PD No. 910 . . .

(1) Undertake by itself or through other arrangements, such as service contracts, the active exploration, exploitation, development, and extraction of energy resources . . .

(2) Regulate all activities relative to the exploration, exploitation, development, and extraction of fossil and nuclear fuels . . .

(P.D. No. 1206) (Emphasis supplied.)

P.D. No. 972 also provides:

Sec. 8. Each coal operating contract herein authorized shall . . . be executed by the Energy Development Board.

Considering the foregoing statutory provisions, the jurisdiction of the BED, in the first instance, to pass upon any question involving the Memorandum of Agreement between IEI and MMIC, revolving as its does around a coal operating contract, should be sustained.

In recent years, it has been the jurisprudential trend to apply the doctrine of primary jurisdiction in many cases involving matters that demand the special competence of administrative agencies. It may occur that the Court has jurisdiction to take cognizance of a particular case, which means that the matter involved is also judicial in character. However, if the case is such that its determination requires the expertise, specialized skills and knowledge of the proper administrative bodies because technical matters or intricate questions of facts are involved, then relief must first be obtained in an administrative proceeding before a remedy will be supplied by the courts even though the matter is within the proper jurisdiction of a court. This is the doctrine of primary jurisdiction. It applies "where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body, in such case the judicial process is suspended pending referral of such issues to the administrative body for its view" (United States v. Western Pacific Railroad Co., 352 U.S. 59, Emphasis supplied).

Clearly, the doctrine of primary jurisdiction finds application in this case since the question of what coal areas should be exploited and developed and which entity should be granted coal operating contracts over said areas involves a technical determination by the BED as the administrative agency in possession of the specialized expertise to act on the matter. The Trial Court does not have the competence to decide matters concerning activities relative to the exploration, exploitation, development and extraction of mineral resources like coal. These issues preclude an initial judicial determination. It behooves the courts to stand aside even when apparently they have statutory power to proceed in recognition of the primary jurisdiction of an administrative agency.

One thrust of the multiplication of administrative agencies is that the interpretation of contracts and the determination of private rights thereunder is no longer a uniquely judicial function, exercisable only by our regular courts (Antipolo Realty Corp. vs. National Housing Authority, 153 SCRA 399, at 407).

The application of the doctrine of primary jurisdiction, however, does not call for the dismissal of the case below. It need only be suspended until after the matters within the competence of the BED are threshed out and determined. Thereby, the principal purpose behind the doctrine of primary jurisdiction is salutarily served.

Uniformity and consistency in the regulation of business entrusted to an administrative agency are secured, and the limited function of review by the judiciary are more rationally exercised, by preliminary resort, for ascertaining and interpreting the circumstances underlying legal issues, to agencies that are better equipped than courts by specialization, by insight gained through experience, and by more flexible procedure (Far East Conference v. United States, 342 U.S. 570).

With the foregoing conclusion arrived at, the question as to the propriety of the summary judgment rendered by the Trial Court becomes unnecessary to resolve.

WHEREFORE, the Court Resolved to DENY the petition. No costs.

SO ORDERED.

Paras, Padilla, Sarmiento and Regalado, JJ., concur.

Footnotes

1 Penned by Justice Nicolas P. Lapena, Jr. and concurred in by Justices Emeterio C. Cui and Justo P. Torres.
2 Judge Benigno M. Puno, Presiding.

QUALITRANS LIMOUSINE SERVICE, INC., petitioner, vs. ROYAL CLASS LIMOUSINE SERVICE, LAND TRANSPORTATION COMMISSION, COURT OF APPEALS, respondents.

SECOND DIVISION

G.R. No. 79886 November 22, 1989
QUALITRANS LIMOUSINE SERVICE, INC., petitioner,
vs.
ROYAL CLASS LIMOUSINE SERVICE, LAND TRANSPORTATION COMMISSION, COURT OF APPEALS, respondents.
G.R. No. 79887 November 22, 1989
QUALITRANS LIMOUSINE SERVICE, INC.,
vs.
ROYAL CLASS LIMOUSINE SERVICE, JUDGE PERPETUA COLOMA, and COURT OF APPEALS, respondents.

SARMIENTO, J.:

These two petitions, in the nature of appeals by certiorari, from a joint judgment of the Court of Appeals, were brought by Qualitrans Limousine Service, Inc., grantee of a certificate of public convenience issued by the defunct Board of Transportation to operate a "garage (tourist) air-conditioned service" ¹ in Manila to any point in the island of Luzon. By our Resolution of September 7, 1988, we consolidated the twin cases. We also gave due course thereto.

The facts, never disputed, are stated in the decision of the Court of Appeals. We quote:

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On June 22, 1982, the then Board of Transportation, now the Land Transportation Commission, rendered a Decision granting petitioner a certificate of public convenience to operate a garage (tourist) air-conditioned service within the City of Manila and from said place to any point in Luzon, and vice-versa (Annex A, CA-G.R. SP No. 10049).

On June 25, 1982, said Decision was amended by converting petitioner's certificate of public convenience for garage service into one for limousine tourist service for the transportation of all outgoing passengers of the Manila International Airport (Annex B, CA-G.R. SP No. 10049).

On October 14, 1985, a Deed of Absolute Sale (Annex I of both Records) was executed by private respondent with Transcare, Inc., a duly licensed limousine service operator and likewise, a holder of a certificate of public convenience (Annex 2 of both Records). By virtue of said sale, the franchise granted to Transcare, Inc. for the use of 40 units of tourist cars was sold to private respondent.

On December 27, 1985, upon application filed for the approval of aforementioned sale, an Order was issued by the Land Transportation Commission granting a provisional permit in favor of private respondent (Annexes C and 3, CA-G.R. SP No. 10049); Annexes B and 3 CA-G.R. No. 10370-SP). The prefatory portion thereof states:

The application filed in this case is for the approval of sale made by TRANSCARE, INC., in favor of ROYAL CLASS LIMOUSINE SERVICE of the Certificate of Public Convenience issued in Case Nos. 81-4405 and 82-415 authorizing the operation of a TOURIST CAR (AIR-CONDITIONED) SERVICE within the New Manila International Airport and from said place to any point in the Island of Luzon accessible to motor vehicle traffic and vice-versa, involving the right to operate forty (40) units authorized therein. ... (Emphasis supplied).

On June 17, 1986, petitioner filed a motion for reconsideration before the Land Transportation Commission to correct the route specified in the prefatory portion of its December 27, 1986 Order (Annex 4 of both Records). Petitioner argues that the application filed by private respondent was for the route from the "New Manila International Airport to hotels and from said hotels to any point in Luzon accessible to vehicular traffic and vice-versa", and not from the "New Manila International Airport ... to any point in the Island of Luzon ... " (ibidem). Petitioner claims that respondent has been soliciting passengers from the New Manila International Airport to transport them to any point in Luzon to the prejudice of petitioner's business.

On September 1, 1986, petitioner filed Civil Case No. 4275-P before the Pasay City Regional Trial Court for damages with prayer for issuance of a writ of mandatory injunction against private respondent (Annex D, CA-G.R. SP No. 10049: Annex 5, CA-G.R. SP No. 10370).

On same date, Hon. Fermin A. Martin. Jr., Vice-Executive Judge of the Pasay City Regional Trial Court, issued a Restraining Order directing private respondent to desist from ferrying passengers from the New Manila International Airport to their residences (Annex E, CA-G.R. SP No. 10049; Annex 6, CA-G.R. SP No. 10370). The petition for preliminary injunction was set for hearing on September 5, 1986.

On September 3, 1986, private respondent, defendant in Civil Case No. 4275, filed an Urgent Motion to Dissolve/Lift Restraining Order issued by Hon. Fermin A. Martin, Jr. (Annex F, CA-G.R. SP No. 10049). Thereafter, same respondent filed an Opposition to petitioner's application for a writ of preliminary mandatory injunction (Annex G, CA-G.R. SP No. 10049).

In the hearing of September 5, 1986, respondent Hon. Perpetua D. Coloma, in whose Branch the civil case was raffled, gave petitioner up to September 8, 1986 within which to file an opposition, if any, to respondent urgent motion.

On September 8, 1986, petitioner filed the required opposition (Annex 1, CA-G.R. SP No. 10049). On that same date, respondent Judge ruled on said urgent motion and petitioner's earlier prayer for the issuance of a preliminary mandatory injunction. Pertinent portions of respondent Judge's Order read as follows:

After a careful examination of the arguments of both parties to support their respective claims, this Court believes that the defendant's contention finds justification under the doctrine of exhaustion of Administrative remedies.

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Further, this Court doesn't have jurisdiction over this case under Sec. 19 BP Blg. 129.

RTC shall have Exclusive jurisdiction.— SEC. 19, BP Blg. 129.

6. In all cases not within the exclusive jurisdiction of a any Court, Tribunal, person or body exercising judicial or quasi-judicial functions.

IN VIEW OF ALL THE FOREGOING, this Court is constrained to Lift as it does lift the Restraining Order dated September 1, 1986 and hereby denies the Issuance of Preliminary Mandatory. (Sic) (Annex H, CA-G.R. SP No. 10049; Annex 8, CA-G.R. SP No. 10370).

On September 16, 1986, petitioner filed a Motion for Reconsideration (Annex J, CA-G.R. SP No. 10049) which was denied by respondent Court on September 19, 1986.

In the meantime, private respondent filed in respondent Commission a Petition for Declaratory Relief (sic) requestioning the latter to declare the extent of its rights under its provisional authority (Annex C, CA-G.R. SP No. 10370).

On September 17, 1986, petitioner was able to secure from respondent Commission an Order directing private respondent "to immediately cease and desist from operating its units from the New Manila International Airport to any point in Luzon" (Annexes D and 9, CA-G.R. SP No. 10370). Two days later, however, this Order was lifted by respondent Commission upon motion of private respondent (Annex 5, CA-G.R. SP No. 10049; Annexes 10 and 11, CA-G.R. SP No. 10370).

On September 23, 1986, petitioner filed before this Court CA-G.R. SP No. 10049 praying, among others, that a Restraining Order issue to prevent implementation of the September 8, and 19, 1986 Orders of respondent Court and to direct said Court to grant the injunction prayed for therein.

On October 1, 1986, petitioner filed its Opposition to private respondent's Petition for Declaratory Relief pending before respondent Commission (Annex F, CA-G.R. SP No. 10370).

On October 9, 1986, respondent Commission acted on private respondent's Petition for Declaratory Relief ruling that the provisional authority granted to private respondent was "to transport passengers from the New Manila International Airport and from said place to any point in the Island of Luzon ...." (Annex G, CA-G.R. SP No. 10370).

On October 15, 1986, petitioner filed a motion for respondent Commission to reconsider its Order of October 9, 1986 (Annex H, CA-G.R. SP No. 10370). This was denied by said Commission in its Order dated October 17, 1986 (Annex I, CA-G.R. SP No. 10370). ²

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The Court of Appeals dismissed both of Qualitrans' petitions and directed it to respect the issuance of a certificate of public convenience (CPC) in favor of Royal Class Limousine Service. The petitioner now holds the Appellate Court to be in error, in these respects:

I

THE COURT OF APPEALS ERRED IN RULING THAT THE LAND TRASPORTATION COMMISSION HAD JURISDICTION OVER PETITIONS FOR DECLARATORY RELIEF,

II

THE COURT OF APPEALS ERRED IN RULING THAT THE PETITION FOR DECLARATORY RELIEF OF PRIVATE RESPONDENT WAS PROPER.

III

THE COURT OF APPEALS ERRED IN NOT RULING THAT THE DECISIONS OF THE LAND TRANSPORTATION COMMISSION IN CASES NOS. 81-4405 AND 82-416 ARE VOID FOR BEING CONTRARY TO MINISTRY ORDER NO. 81-054.

IV

THE COURT OF APPEALS ERRED IN NOT RULING THAT THE LAND TRANSPORTATION COMMISSION DENIED PETITIONER DUE PROCESS OF LAW, BECAUSE IT ADVANCED THE TIME OF THE HEARING WITHOUT NOTICE TO PETITIONER.

V

THE COURT OF APPEALS ERRED IN RULING THAT THE ORDERS OF OCTOBER 9 AND 17, 1986 OF THE LAND TRANSPORTATION COMMISSION WAS SUPPORTED BY THE EVIDENCE, WHEN NONE WAS EVER ADDUCED.

VI

THE COURT OF APPEALS ERRED IN NOT RULING THAT PRIVATE RESPONDENT IS NOT AUTHORIZED TO TRANSPORT PASSENGERS DIRECTLY FROM THE MANILA INTERNATIONAL AIRPORT TO DESTINATIONS OTHER THAN HOTELS. ³

Anent the said Appellate Court's affirmance of the Regional Trial Court's Order ⁴ dismissing Qualitrans' complaint for injunction and damages, Qualitrans assigns the following errors:

I

THE REGIONAL TRIAL COURT HAS JURISDICTION OVER CIVIL CASE NO. 4275-P.

II

THE DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES IS NOT APPLICABLE TO THIS CASE.

III

PETITIONER IS ENTITLED TO THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION. ⁵

We sustain the Court of Appeals in both cases.

I (G.R. No 79886)

1. As to claims that the Land Transportation Commission can not entertain suits for declaratory relief, there is merit in the ruling under question to the effect that the Commission, under its enabling law, Executive Order No. 1011, has ample powers to modify certificates of public convenience, including the grant of latitudinarian franchises in favor of public utilities. We quote:

... The (Land Transportation) Commission shall have, among others, the following powers and functions:

(a) Quasi-judicial powers and functions which require notice and hearing—

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(2) To issue, amend, revise, suspend or cancel Certificates of Public Convenience or permits authorizing the operation of public land transportation services provided by motorized vehicles, and to prescribe the appropriate terms and conditions therefor; ⁶

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Royal Class' application is, quintessentially, a petition for an expanded route, over which the Board exercises jurisdiction under its charter. If it seemed like an "action for declaratory relief", it is only a coincidence, for the nature of an action is to be determined by what the petition alleges and not by the appellation the parties have attached to their pleadings. ⁷ Whether it is a petition for declaratory relief or for revision or grant or cancellation of an existing CPC, the authority of the Commission to act is justified, so long as it has been properly invoked.

The fact that Qualitrans had, meanwhile, commenced suit in the Regional Trial Court (RTC) does not oust the Commission of its jurisdiction. The Commission had a primacy of authority to take cognizance of Royal Class 'inquiry. It is to be noted, indeed, that the very trial court, by its order of September 8, 1986, ⁸ denied the issuance of preliminary injunctive relief sought by Qualitrans, in deference, precisely, to the Board's primal and preferential jurisdiction.

2. Of course, the Commission's action must have been preceded by due notice and hearing, ⁹ and precisely, it is Qualitrans' complaint that it had been deprived of due process for failure of the transportation body to give it notice and hearing (in particular, of Royal Class' motion to lift cease and desist order). The records show, however, that the decision of the Board is founded on substantial evidence. ¹⁰ Moreover, in administrative cases, notice" is not indispensable, but the deprivation of opportunity to be heard. That is not the case here. The reality is that on October 1, 1986, Qualitrans opposed Royal Class' application for "declaratory relief." ¹¹ It can not therefore be heard to say that the Commission had acted without giving the petitioner an avenue to air its side of the story.

3. Anent charges that the Commission issued the questioned certificate of public convenience without evidence, suffice it to say that:

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. . .the courts cannot or will not determine a controversy involving a question which is within the jurisdiction of an administrative tribunal prior to the decision of that question by the administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience, and services of the administrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the purposes of the regulatory statute administered." Recently, this Court speaking thru Mr. Chief Justice Claudio Teehankee said:

In this era of clogged court dockets, the need for specialized administrative boards or commissions with the special knowledge, experience and capability to hear and determine promptly disputes on technical matters or essentially factual matters, subject to judicial review in case of grave abuse of discretion, has become well nigh indispensable. ¹²

The records also reveal that there were sound reasons for the lifting of the Commission's cease and desist order, to wit:

xxx xxx xxx

1. Complaint's (sic) Motion for Reconsideration of the order dated December 27, 1985, in Case No. 85-9619 filed on June 17, 1986, has not yet been resolved by this Commission;

2. Respondent's Petition for Declaratory Relief filed on September 15, 1986, is still pending resolution by this Commission;

3. Considerable losses and irreparable injury will be sustained by respondent, not to mention the loss of income of its drivers/employees whose only source of livelihood is dependent on the present and continuous operation of respondent; and

4. Above all, public interest and convenience will suffer and be prejudiced if respondent is restrained from ferrying passengers from the New MIA directly to their respective residences;

5. Likewise, a restraining order should be granted only where there is a clear showing that there is indeed a flagrant violation on (sic) the property right of another. Absence of which or in case of ambiguity, a restraining order is unavailing. And in the present case there is really that ambiguity attendant to the issues involved, which this Commission shall have to resolve on the merits so as not to prejudice either party. ¹³

3. As to charges that the certificate of public convenience of the private respondent had allowed it to transport clients from the Ninoy Aquino International Airport only to hotels but not to any other destination, the Court is agreed that the controlling jurisprudence is Carmelo and Oriol v. Monserrat, ¹⁴ in which we held:

xxx xxx xxx

Everything else being equal, the real, primary question involved is whether it is better and more convenient for the travelling public in the City of Manila to have two taxicab companies in operation than it is to have one, and whether in truth and in fact the granting of another similar license to the petitioners would operate as a real injury to Monserrat. He is the first in the field and so long as he maintains good and efficient service and meets the demand of the public, it is fair to assume that he will hold his present customers and would have nothing to fear from the granting of a license to the petitioners, and if for any reason he does not give the required kind of service or satisfy the needs of the public, then he would have no right to complain.

xxx xxx xxx

That is to say, taxies are not operated on any schedule or over any certain route or between certain points or in any direction, and that the certificate granted to Monserrat is in the nature of a blanket franchise to operate a taxicab service over any and all of the streets and alleys of the city, in any direction, from any place, and at any time, subject to the call and wish of the customer only both as to time, place, and route of travel. That is to say, it is in the sole discretion of the person desiring to travel whether he shall call a taxi or an auto garage car, and as to when he shall call it, and where he shall go, and in the operation of an autobus line, the operator must maintain a fixed schedule over a specified route between certain points, and must make his trips with or without passengers. ¹⁵

The abovestated doctrine applies with equal force to the case under consideration. For although Monserrat involved a fleet of taxicabs, the taxicab business is no different, fundamentally, from a limousine service because both have very broad destinations.

That Royal Class had, itself, admitted that its franchise covered the NAIA-hotel route alone, does not weaken the Commission's ruling. The yardstick, so Monserrat tells us, is that:

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In the granting or refusal of a certificate of public convenience, all things considered, the question is what is for the best interests of the public. ¹⁶

Like Monserrat, the Court finds it "hard to conceive how it would be for the best interests of the public" ¹⁷, to have one line only, "and how the public would be injured by the granting of the certificate in question, for it must be conceded that two companies in the field would stimulate the business..." ¹⁸

It is simply bellyaching to say that Royal Class had transcended the bounds of the certificate of public convenience granted to it. What Qualitrans is plainly carping about is the threat the Royal Class' certificate of public convenience poses on its foothold in the "limo" service business. This is monopolism, plainly and simply, and we can not tolerate it. The constitutional mandate is for "a more equitable distribution of opportunities, income, and wealth" ¹⁹ and for the State to regulate or prohibit monopolies." ²⁰

As we have held furthermore, a provisional authority is given on showing of public need. ²¹ Thus, it may be issued ex-parte.

II (G.R. No. 79887)

1. For the same reasons, the above appeal must also fail. The Regional Trial Court (RTC) had acted correctly in dismissing Qualitrans' damage suit.

Ramos v. Court of First Instance of Tayabas, ²² in which we sustained the jurisdiction of the CFI (now, RTC) at the expense of Public Service Commission (now, the Land Transportation Commission), has no application. In that case, the aggrieved party had denounced his adversary's action before the PSC. The latter, however, had failed to act. We stamped our imprimatur on the CFI's jurisdiction because of temporal constraints. ("Damages pile up day by day as infringement continues. The Public Service Commission has been afforded an opportunity to give relief and has not done so." ²³

In addition, there is a need to square the functioning of administrative bodies vis-a-vis contemporary realities. As we have observed, the increasing pattern of law and legal development has been to entrust "special cases" to "special bodies" rather than the courts. As we have also held, the shift of emphasis is attributed to the need to slacken the encumbered dockets of the judiciary and so also, to leave "special cases" to specialists and persons trained therefor.

There is no merit in the claims that Royal Class has been guilty of unfair competition. For starters, its CPC has been duly issued. It (CPC) can not therefore be said to have been acquired through duress or deceit to warrant such a charge.

2. Failure to exhaust administrative remedies is arrayed against Qualitrans. Hence, it can not validly revoke our ruling in Arrow Transportation Corp. v. Board of Transportation. ²⁴ That case was impelled by urgent need, which the courts could address more swiftly. It is not the case here. Not much is at stake in the "limo" business. We hold that the Commission should have better been left alone to discharge its duty without court interference.

3. We are not impressed that Qualitrans has successfully shown that it is entitled to the injunctive writ. Its appeal to "ruinous competition" ²⁵ is not well-taken. Under the Constitution, the national economy stands for, "competi[tion] in both domestic and foreign markets." ²⁶ Obviously, not every kind of competition is "ruinous competition". All things considered and all things equal, competition is a healthy thing. Besides, there is no showing that Qualitrans stood to lose its capital investment with the approval of Royal Class' franchise. ²⁷ Our considered opinion is that Qualitrans should improve its services as a counter-balance to Royal Class' own toehold in the market. And let that be its challenge.

WHEREFORE, the petitions are DENIED. The decision appealed from is AFFIRMED in toto. No costs.

SO ORDERED.

Paras, Padilla and Regalado, JJ., concur.

Melencio-Herrera (Chairperson), J., is on leave.

Footnotes
1 Rollo, G.R. No. 79886, 70; rollo, G.R. No. 79887, 51.
2 Id., 70-73, id., 51-54; emphasis in the original.
3 Id., 13.
4 Id., 44-47.
5 Id .,17-18.
6 Exec. Order No. 1011, sec. 5.
7 See Enriquez v. Macadaeg, 84 Phil.. 674 (1949); Aquino v. COMELEC, No. L-40004, January 31, 1975, 62 SCRA 275.
8 Rollo, G.R. No. 79887, id., 44 - 47.
9 See Exec. Order No. 1011, sec. 5, supra.
10 Ang Tibay v. Court of Industrial Relations, 69 Phil. 635 (1940).
11 Rollo, id., 73; Id., 54.
12 Saavedra, Jr. v. Securities & Exchange Commission, No. 80879, March 21, 1988, 159 SCRA 57; also Abejo v. Dela Cruz, Nos. 63558, 68450-51, May 19, 1987, 149 SCRA 654; also Blue Bar Coconut Philippines v. Tantuico, Jr., No. L-47501; July 29, 1988,163 SCRA 716.
13 Rollo, id., G.R. No. 79886, 52-53.
1 4 55 Phil. 644 (1931).
15 Supra, 648; 649.
16 Supra, 649.
17 Supra.
18 Supra, 649-650.
19 CONST. (1987), art. XII, sec. 1.
20 Supra, sec. 19.
21 Arrow Transportation Corp. v. Board of Transportation, No. L-39655, March 21, 1975, 63 SCRA 193.
22 58 Phil. 374 (1933).
23 Supra, 377.
24 Supra.
25 Rollo, id., G.R. No. 79887, 26.
26 CONST., supra, art. XII, see. 1.
27 Vda. de Lat v. Public Service Commission, No. L-34987, February 26, 1988,158 SCRA 180.

PO2 RUEL C. MONTOYA, petitioner, vs. POLICE DIRECTOR REYNALDO P. VARILLA, REGIONAL DIRECTOR, NATIONAL CAPITAL REGION, POLICE OFFICE and ATTY. RUFINO JEFFREY L. MANERE, REGIONAL LEGAL AFFAIRS SERVICE, respondents.

G.R. No. 180146             December 18, 2008
PO2 RUEL C. MONTOYA, petitioner,
vs.
POLICE DIRECTOR REYNALDO P. VARILLA, REGIONAL DIRECTOR, NATIONAL CAPITAL REGION, POLICE OFFICE and ATTY. RUFINO JEFFREY L. MANERE, REGIONAL LEGAL AFFAIRS SERVICE, respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court seeking to nullify and set aside the Decision¹ dated 9 August 2007 and Resolution² dated 18 October 2007 of the Court of Appeals in CA-G.R. SP No. 96022, which affirmed Resolutions No. 05-1200 and No. 06-1500 dated 24 August 2005 and 23 August 2006, respectively, of the Civil Service Commission (CSC), dismissing petitioner Police Officer 2 (PO2) Ruel C. Montoya from the police service.

The following are the factual antecedents:

Montoya, a member of the Philippine National Police (PNP), was assigned to the Central Police District (CPD) in Quezon City, when the National Police Commission (NAPOLCOM) issued Special Order No. 1044³ on 9 September 1998 dropping him from the rolls, effective 15 August 1998, for failure to attend the Law Enforcement and Enhancement Course (LEEC) at the Special Training Unit, National Capital Region Police Office (NCRPO), Camp Bagong Diwa, Taguig City. Montoya had been absent without official leave (AWOL) for a period of 67 days, from 23 January 1998 to 31 March 1998.

On 15 December 1998, four months after he was dropped from the rolls, Montoya filed a Motion for Reconsideration thereof addressed to the PNP Regional Director for the National Capital Region (NCR), explaining that on 22 January 1998, he went to the Baler Police Station/Police Station 2 to have his Sick Leave Form approved by the station commander. Allegedly due to the fact that his name had already been forwarded to the NCRPO for the LEEC, his Sick Leave Form was not approved. Montoya averred that his failure to attend the LEEC was beyond his control, since he was suffering from arthritis with on and off symptoms of severe body pain. Montoya attached to his Motion a certification simply dated 1998, issued by a certain Dr. Jesus G. de Guzman, and authenticated by Police Chief Inspector (P/CINSP.) Ethel Y. Tesoro, Chief, Medical Service, CPD.

Upon the recommendation of the Chief of the NCRPO Legal Division, the NCR Regional Director issued on 11 June 1999 Special Order No. 990 canceling Special Order No. 1044. Montoya was also preventively suspended for 30 days, from 8 June to 8 July 1999, pending Summary Proceedings of his administrative liability. The 67 days when Montoya went on absence without leave (AWOL) were immediately deducted from his leave credits.

The Summary Dismissal Proceedings against Montoya were conducted by Hearing Officer Police Superintendent (P/Supt.) Francisco Don C. Montenegro of the Central Police District Office (CPDO), and based on his findings, the NCR Regional Director rendered a Decision⁴ on 23 June 2000 dismissing Montoya from the police service for Serious Neglect of Duty (due to AWOL), effective immediately. Montoya received a copy of said Decision on 20 July 2000.

Allegedly unassisted by counsel, Montoya filed on 1 August 2000 with the CPD office a Petition for Review/Motion for Reconsideration⁵ of the 23 June 2000 Decision of the NCR Regional Director, which he addressed to the PNP Chief. In a Memorandum issued on 3 July 2002 by the Directorate for Personnel and Records Management of the PNP Headquarters, Montoya’s Petition/Motion was denied for lack of jurisdiction, since a disciplinary action involving demotion or dismissal from service imposed by a PNP regional director may only be appealed to the Regional Appellate Board (RAB).

Montoya next filed on 2 September 2002 an appeal of the 23 June 2000 Decision of the NCR Regional Director before the RAB of the National Capital Region (RAB-NCR), alleging lack of due process considering that he was not even notified of any hearing by the Summary Hearing Officer and was thus deprived of the opportunity to present evidence in his defense. The Summary Hearing Officer in the Summary Dismissal Proceedings against him recommended his dismissal from police service based on his failure to report for the LEEC, without even looking into his side of the controversy.

On 11 December 2002, the RAB-NCR rendered its Decision⁶ granting Montoya’s appeal and ordering his reinstatement. Pertinent provisions of the said Decision read:

The Summary Hearing Officer (SHO), P/Supt. Francisco Don Montenegro, conducted the hearing ex-parte on the basis only of the Motion for Reconsideration filed by the [herein petitioner Montoya] in which he categorically stated that on January 22, 1998, when he went to Police Station 2 to have his sick leave form approved, he was informed that his name was already forwarded to NCRPO to undergo LEEC schooling. With that information, the SHO concluded that appellant, PO2 Montoya, should have proceeded to STU, NCRPO to inform his superior about his physical predicament. However, [Montoya] did nothing to have the officers of STU, NCRPO notified of his sickness in order that appropriate actions can be instituted. Sixty-seven days is too long for a period for [Montoya] to allow even one day of reporting to STU, NCRPO to present his Medical Certificate and seek proper action for his ailment. Thus, [Montoya] was ordered dismissed from the Police Service.

x x x x

This Board, after careful review and evaluation of the records and arguments/evidence presented by herein [Montoya] finds this appeal meritorious and tenable. Nothing on the records would show that [Montoya] was notified of the summary hearing conducted by the Summary Hearing Officer nor was he given a chance to explain his side and submit controverting evidence on his behalf. On the other hand, what appeared on the record is the fact that the Summary Hearing Officer, who was tasked to resolve this case, conducted the hearing ex-parte. Thereafter, he recommended for the [Montoya’s] dismissal from the police service on the ground that the latter failed to inform his superiors about his physical predicament since [Montoya] did nothing to have the officers of STU, NCRPO notified of his sickness in order that appropriate actions can be instituted. Summary Hearing Officer further concluded that sixty-seven days is too long for a period (sic) for [Montoya] to allow even one day of reporting to STU, NCRPO to present his Medical Certificate and seek proper action for his ailment.

The RAB-NCR decreed in the end:

Wherefore, premises considered, the decision appealed from is hereby reversed and movant-appellant PO2 Ruel Catud Montoya is hereby ordered to be reinstated in the police service without loss of seniority rights and with full payment of his salaries and backwages covering the period effective from the time of his dismissal from the service up to his reinstatement.⁷

Thereafter, the NCR Regional Director authorized Police Senior Superintendent (P/SSupt.) Rufino Jeffrey L. Manere (Manere) to appeal several RAB-NCR decisions involving different police officers,⁸ including the Decision dated 11 December 2002 on Montoya’s case, before the Department of Interior and Local Government (DILG). The NCR Regional Director assailed the RAB-NCR decision reinstating Montoya in the police service on the following grounds:

a. Failure to file a Notice of Appeal with the NCRPO prior to his appeal to the Appellate Board, as provided by Sec. 2, Rule III, MC # 91-007;

b. The Board erred to take cognizance of the case despite the fact that the decision of the NCRPO dated 23 June 2000 had already become final and executory.

c. The Board erred in giving backwages despite the "no work, no pay" policy.

On 8 August 2003, Montoya, together with the other police personnel⁹ reinstated in the service by RAB-NCR (hereinafter collectively referred to as Montoya, et al.), filed before the DILG an Urgent Motion to Dismiss and/or Opposition to the Appeal of the NCR Regional Director.

On 10 November 2003, DILG Secretary Jose D. Lina, Jr. issued an Order denying the appeal of the NCR Regional Director.¹⁰ DILG Secretary Lina noted that the NCR Regional Director received a copy of the RAB-NCR decision on Montoya’s case on 10 February 2003, but it only appealed the same to the DILG on 30 April 2003, beyond the 15-day reglementary period for appeals. DILG Secretary Lina also declared that neither Manere nor the NCR Regional Director has personality to appeal the RAB-NCR decision to the DILG. The right to appeal from the decision of the RAB to the DILG is available only to the active complainant or the respondent who was imposed a penalty of demotion in rank, forced resignation, or dismissal from the service. Manere, representing the NCR Regional Director, is not a party complainant or a respondent aggrieved by the adverse decision, hence, he cannot appeal the said decision. Similarly, there is no specific provision allowing the NCR Regional Director, in his capacity as the judge and/or arbiter of PNP disciplinary cases, to file an appeal to the DILG from the decision of the RAB. Finally, DILG Secretary Lina explained that the filing of an appeal by "either party" under Section 45 of Republic Act No. 6975¹¹ covers only demotion and dismissal from the service and never exoneration and suspension. Thus, the appeal of the RAB-NCR decision exonerating Montoya should be dismissed for lack of jurisdiction and for the reason that the said decision had already become final and executory. The dispositive portion of DILG Secretary Lina’s decision reads:

WHEREFORE, the instant appeals are hereby denied for lack of merit. The assailed decisions of the Regional Appellate Board – National Capital Region, 4^th Division, are hereby affirmed in toto.¹²

The NCR Regional Director, represented by Manere, appealed the Order dated 10 November 2003 of DILG Secretary Lina to the Civil Service Commission (CSC). The NCR Regional Director asserted its right to appeal citing Civil Service Commission v. Dacoycoy.¹³

On 23 March 2004, the NCR Regional Director issued Special Order No. 611 reinstating Montoya, et al., without prejudice to the pending appeal of the NCR Regional Director before the CSC.

Subsequently, the CSC issued on 24 August 2005 Resolution No. 05-1200 which recognized the right of the PNP disciplining authorities to appeal the decision of the RAB-NCR to the DILG. The CSC set aside the 10 November 2003 Order of DILG Secretary Lina and affirmed the decisions of the NCR Regional Director dismissing Montoya, et al., from police service. According to the CSC, Montoya, in particular, was guilty of laches and abandonment of his position. It also held that the 11 December 2002 Decision of the RAB-NCR on Montoya’s case, affirmed by DILG Secretary Lina, was based on mere affidavits which were not substantiated.

The CSC denied the Motion for Reconsideration of Montoya, et al., in Resolution No. 06-1500 dated 23 August 2006 for lack of new evidence or any valid reason that warrants the setting aside or modification of its Resolution No. 05-1200.

Montoya, et al., sought recourse to the Court of Appeals via a Petition for Certiorari under Rule 43 with Application for Temporary Restraining Order (TRO) and Preliminary Injunction, docketed as CA-G.R. SP No. 96022.

On 9 August 2007, the Court of Appeals promulgated its Decision dismissing CA-G.R. SP No. 96022, since there was no grave abuse of discretion on the part of the CSC in issuing Resolutions No. 05-1200 and No. 06-1500. The dispositive portion of said Decision states:

Wherefore this Court DENIES the instant petition and AFFIRMS Resolution No. 05-1200 dated August 24, 2005 and Resolution No. 06-1500 dated August 23, 2006 of the Civil Service Commission. Accordingly, the Order dated November 10, 2003 of the DILG Secretary Jose D. Lina, Jr. affirming the nine (9) decisions of the Regional Appellate Board reinstating [Montoya, et al.] to the police service is SET ASIDE. The decisions of the NCRPO Regional Director dismissing petitioners-police officers Enrique C. Paulino, Rebecca P. Fernandez, Donato L. Geda, Marlo S. Quiambao, Danilo De Leon Nuqui, Ruel C. Montoya, Cecilia Z. de Leon, Alberto S. Mendoza and Rodolfo C. de Leon are hereby AFFIRMED.¹⁴

Aggrieved, Montoya filed his own Motion for Reconsideration in CA-G.R. SP No. 96022, but it was denied by the Court of Appeals in its Resolution dated 18 October 2007.

Hence, the present Petition¹⁵ in which Montoya raises the following issues:

I. WHETHER OR NOT RESPONDENT MANERE FAILED TO EXHAUST ADMINISTRATIVE REMEDIES.

II. WHETHER OR NOT MANERE HAS THE LEGAL PERSONALITY TO APPEAL THE DECISION EXONERATING THE PETITIONER.

III. WHETHER OR NOT THE RIGHT TO DUE PROCESS OF PETITIONER WAS VIOLATED.

IV. WHETHER OR NOT PETITIONER DELAYED IN APPEALING THE DECISION SUMMARILY DISMISSING HIM.

V. WHETHER OR NOT PETITIONER DESERVED TO BE DISMISSED FROM SERVICE.

The Court finds merit in the Petition at bar.

Though procedural rules in administrative proceedings are less stringent and often applied more liberally, administrative proceedings are not exempt from basic and fundamental procedural principles, such as the right to due process in investigations and hearings. The right to substantive and procedural due process is applicable to administrative proceedings.¹⁶

Well-settled is the rule that the essence of due process is simply an opportunity to be heard or, as applied to administrative proceedings, an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of.¹⁷ Unarguably, this rule, as it is stated, strips down administrative due process to its most fundamental nature and sufficiently justifies freeing administrative proceedings from the rigidity of procedural requirements. In particular, however, due process in administrative proceedings has also been recognized to include the following: (1) the right to actual or constructive notice of the institution of proceedings which may affect a respondent’s legal rights; (2) a real opportunity to be heard personally or with the assistance of counsel, to present witnesses and evidence in one’s favor, and to defend one’s rights; (3) a tribunal vested with competent jurisdiction and so constituted as to afford a person charged administratively a reasonable guarantee of honesty as well as impartiality; and (4) a finding by said tribunal which is supported by substantial evidence submitted for consideration during the hearing or contained in the records or made known to the parties affected.¹⁸

Hence, even if administrative tribunals exercising quasi-judicial powers are not strictly bound by procedural requirements, they are still bound by law and equity to observe the fundamental requirements of due process. Notice to enable the other party to be heard and to present evidence is not a mere technicality or a trivial matter in any administrative or judicial proceedings.¹⁹ In the application of the principle of due process, what is sought to be safeguarded is not lack of previous notice but the denial of the opportunity to be heard.²⁰

In the instant case, the Summary Dismissal Proceedings against Montoya were flawed from the very beginning when these were conducted without due notice to him. The NCR Regional Director, through Manere, never contested the fact that the Hearing Officer proceeded with his investigation without giving notice to Montoya. Without notice, Montoya was unable to attend the hearings, present written or oral arguments, and submit evidence in his favor; he was completely deprived of the opportunity to be heard on the administrative charges against him and was irrefragably denied due process.

The cardinal precept is that where there is a violation of basic constitutional rights, courts are ousted from their jurisdiction. The violation of a party’s right to due process raises a serious jurisdictional issue which cannot be glossed over or disregarded at will. Where the denial of the fundamental right of due process is apparent, a decision rendered in disregard of that right is void for lack of jurisdiction.²¹ The rule must be equally true for quasi-judicial administrative bodies, for the constitutional guarantee that no man shall be deprived of life, liberty, or property without due process is unqualified by what type of proceedings (whether judicial or administrative) he stands to lose the same. Consequently, the Decision dated 23 June 2000 of the NCR Regional Director dismissing Montoya from service is void for having been rendered in violation of the latter’s due process.

The foregoing finding of this Court precludes a ruling that Montoya delayed appealing the NCR Regional Director’s Decision of 23 June 2000, and the said decision has already become final and executory.

The Court reviews the vital dates. Montoya was able to receive a copy of the 23 June 2000 Decision of the NCR Regional Director dismissing him from service on 20 July 2000. He erroneously filed his Petition for Review/Motion for Reconsideration with the PNP Chief on 1 August 2000. The PNP denied Montoya’s Petition/Motion on 3 July 2002, two years after the filing thereof, citing lack of jurisdiction, considering that the proper appellate body is the RAB-NCR. Thus, Montoya was only able to file his appeal of the decision of the NCR Regional Director before the RAB-NCR on 2 September 2002.

Section 45 of Republic Act No. 6975, otherwise known as the DILG Act of 1990, provides:

SEC. 45. Finality of Disciplinary Action. – The disciplinary action imposed upon a member of the PNP shall be final and executory: Provided, That a disciplinary action imposed by the Regional Director or by the PLEB involving demotion or dismissal from the service may be appealed to the Regional Appellate Board within ten (10) days from receipt of the copy of the notice of decision: Provided, further, That the disciplinary action imposed by the Chief of the PNP involving demotion or dismissal may be appealed to the National Appellate Board within ten (10) days from receipt thereof: Provided, furthermore, That, the Regional or National Appellate Board, as the case may be, shall decide the appeal within sixty (60) days from receipt of the notice of appeal: Provided, finally, That failure of the Regional Appellate Board to act on the appeal within said period shall render the decision final and executory without prejudice, however, to the filing of an appeal by either party with the Secretary. (Underscoring supplied.)

Obviously, Montoya’s appeal on 2 September 2002 with the RAB-NCR, the appellate body with jurisdiction, was filed way beyond 10 days from his receipt of a copy of the NCR Regional Director’s decision on 20 July 2000.

As a general rule, the perfection of an appeal in the manner and within the period permitted by law is not only mandatory but also jurisdictional, and the failure to perfect the appeal renders the judgment of the court final and executory.²² The Court, however, reiterates its previous pronouncements herein that the Summary Dismissal Proceedings were conducted without notice to Montoya and in violation of his right to due process. The violation of Montoya’s fundamental constitutional right deprived the NCR Regional Director of jurisdiction over Montoya’s administrative case; and the decision rendered by the NCR Regional Director therein was void. A void judgment does not become final and executory and may be challenged at any time.

A decision of the court (or, in this case, a quasi-judicial administrative body) without jurisdiction is null and void; hence, it can never logically become final and executory. Such a judgment may be attacked directly or collaterally.²³ Any judgment or decision rendered notwithstanding the violation of due process may be regarded as a "lawless thing which can be treated as an outlaw and slain at sight, or ignored wherever it exhibits its head."²⁴

The Court also observes that it took the PNP two years to deny Montoya’s Petition/Motion before it, even though the PNP Chief manifestly did not have jurisdiction over the same. While Montoya did err in first filing his appeal with the PNP Chief, the prompt denial thereof would have spurred Montoya to re-file his appeal sooner before the appropriate forum, the RAB-NCR.

As to the issue of whether the NCR Regional Director may appeal the Decisions dated 11 December 2002 and 10 November 2003 of the RAB-NCR and DILG Secretary Lina, respectively, the Court answers in the negative.

Prior to Dacoycoy, case law held that dismissal of the charges against or exoneration of respondents in administrative disciplinary proceedings is final and not subject to appeal even by the government. On 29 April 1999, the Court promulgated its Decision in Dacoycoy, in which it made the following pronouncements:

At this point, we have necessarily to resolve the question of the party adversely affected who may take an appeal from an adverse decision of the appellate court in an administrative civil service disciplinary case. There is no question that respondent Dacoycoy may appeal to the Court of Appeals from the decision of the Civil Service Commission adverse to him. He was the respondent official meted out the penalty of dismissal from the service. On appeal to the Court of Appeals, the court required the petitioner therein, herein respondent Dacoycoy, to implead the Civil Service Commission as public respondent as the government agency tasked with the duty to enforce the constitutional and statutory provisions on the civil service.

Subsequently, the Court of Appeals reversed the decision of the Civil Service Commission and held respondent not guilty of nepotism. Who now may appeal the decision of the Court of Appeals to the Supreme Court? Certainly not the respondent, who was declared not guilty of the charge. Nor the complainant George P. Suan, who was merely a witness for the government. Consequently, the Civil Service Commission has become the party adversely affected by such ruling, which seriously prejudices the civil service system. Hence, as an aggrieved party, it may appeal the decision of the Court of Appeals to the Supreme Court. By this ruling, we now expressly abandon and overrule extant jurisprudence that "the phrase ‘party adversely affected by the decision’ refers to the government employee against whom the administrative case is filed for the purpose of disciplinary action which may take the form of suspension, demotion in rank or salary, transfer, removal or dismissal from office" and not included are "cases where the penalty imposed is suspension for not more than thirty (30) days or fine in an amount not exceeding thirty days salary" or "when the respondent is exonerated of the charges, there is no occasion for appeal." In other words, we overrule prior decisions holding that the Civil Service Law "does not contemplate a review of decisions exonerating officers or employees from administrative charges" enunciated in Paredes v. Civil Service Commission; Mendez v. Civil Service Commission; Magpale v. Civil Service Commission; Navarro v. Civil Service Commission and Export Processing Zone Authority and more recently Del Castillo v. Civil Service Commission.²⁵ (Emphasis ours.)

Subsequently, the Court qualified its declarations in Dacoycoy. In National Appellate Board of the National Police Commission v. Mamauag,²⁶ citing Mathay, Jr. v. Court of Appeals,²⁷ this Court elucidated that:

RA 6975 itself does not authorize a private complainant to appeal a decision of the disciplining authority. Sections 43 and 45 of RA 6975 authorize "either party" to appeal in the instances that the law allows appeal. One party is the PNP member-respondent when the disciplining authority imposes the penalty of demotion or dismissal from the service. The other party is the government when the disciplining authority imposes the penalty of demotion but the government believes that dismissal from the services is the proper penalty.

However, the government party that can appeal is not the disciplining authority or tribunal which previously heard the case and imposed the penalty of demotion or dismissal from the service. The government party appealing must be one that is prosecuting the administrative case against the respondent. Otherwise, an anomalous situation will result where the disciplining authority or tribunal hearing the case, instead of being impartial and detached, becomes an active participant in prosecuting the respondent. Thus, in Mathay, Jr. v. Court of Appeals, decided after Dacoycoy, the Court declared:

To be sure, when the resolutions of the Civil Service Commission were brought before the Court of Appeals, the Civil Service Commission was included only as a nominal party. As a quasi-judicial body, the Civil Service Commission can be likened to a judge who should "detach himself from cases where his decision is appealed to a higher court for review."

In instituting G.R. No. 126354, the Civil Service Commission dangerously departed from its role as adjudicator and became an advocate. Its mandated function is to "hear and decide administrative cases instituted by or brought before it directly or on appeal, including contested appointments and to review decisions and actions of its offices and agencies," not to litigate.

While Dacoycoy established that the government could appeal the decision exonerating respondent public officer or employee from administrative charges, it was Mamauag which specifically required that the government party appealing must be the one prosecuting the case and not the disciplining authority or tribunal which heard the administrative case.

In the present case, Montoya appealed to the RAB-NCR the 23 June 2000 Decision of the NCR Regional Director dismissing him from service. The RAB-NCR, in its 11 December 2002 Decision, reversed the appealed decision of the NCR Regional Director and ordered Montoya’s reinstatement. The NCR Regional Director then appealed the decision of the RAB-NCR to the Office of the DILG Secretary. DILG Secretary Lina, in his Decision dated 10 November 2003, affirmed the decision of the RAB-NCR. Once more, the NCR Regional Director filed an appeal with the CSC, where he was able to secure a favorable ruling.

It is beyond dispute that the NCR Regional Director was acting as the investigating and disciplining authority when he rendered his Decision dated 23 June 2000 dismissing Montoya from the service. The pronouncement in Mamauag, that the disciplining authority or tribunal which heard the case and imposed the penalty of demotion or dismissal should not be the one appealing the subsequent exoneration of the public officer or employee, squarely applies to the NCR Regional Director.

In Pleyto v. Philippine National Police Criminal Investigation and Detection Group,²⁸ the Court explained:

It is a well-known doctrine that a judge should detach himself from cases where his decision is appealed to a higher court for review. The raison d'etre for such doctrine is the fact that a judge is not an active combatant in such proceeding and must leave the opposing parties to contend their individual positions and the appellate court to decide the issues without his active participation. When a judge actively participates in the appeal of his judgment, he, in a way, ceases to be judicial and has become adversarial instead.

The court or the quasi-judicial agency must be detached and impartial, not only when hearing and resolving the case before it, but even when its judgment is brought on appeal before a higher court. The judge of a court or the officer of a quasi-judicial agency must keep in mind that he is an adjudicator who must settle the controversies between parties in accordance with the evidence and the applicable laws, regulations, and/or jurisprudence. His judgment should already clearly and completely state his findings of fact and law. There must be no more need for him to justify further his judgment when it is appealed before appellate courts. When the court judge or the quasi-judicial officer intervenes as a party in the appealed case, he inevitably forsakes his detachment and impartiality, and his interest in the case becomes personal since his objective now is no longer only to settle the controversy between the original parties (which he had already accomplished by rendering his judgment), but more significantly, to refute the appellant’s assignment of errors, defend his judgment, and prevent it from being overturned on appeal.

The NCR Regional Director, in actively appealing the reversal of his Decision, had inevitably forsaken his impartiality and had become adversarial. His interest was only in seeing to it that his decision would be reinstated.

The party who has the personality and interest to appeal the decisions of the RAB-NCR and DILG Secretary Lina exonerating Montoya from the administrative charges against him and reinstating him to the service is the PNP as a bureau. It was the PNP, in the exercise of its authority to implement internal discipline among its members, which instigated the administrative investigation of Montoya, so it may be deemed the prosecuting government party. And it is the PNP which stands to suffer as a result of the purportedly wrongful exoneration of Montoya, since it would be compelled to take back to its fold a delinquent member.

Given all of the foregoing, the Court upholds the decision of the RAB-NCR, affirmed by DILG Secretary Lina, reinstating Montoya to the service. It was only the RAB-NCR which properly acquired jurisdiction over the appeal filed before it and was able to render a decision after a consideration of both sides to the controversy. In Go v. National Police Commission,²⁹ the Court already issued a caveat, worth reiterating herein:

We conclude that petitioner was denied the due process of law and that not even the fact that the charge against him is serious and evidence of his guilt is – in the opinion of his superiors – strong can compensate for the procedural shortcut evident in the record of this case. It is precisely in cases such as this that the utmost care be exercised lest in the drive to clean up the ranks of the police those who are innocent are denied justice or, through blunder, those who are guilty are allowed to escape punishment.

Before finally writing finis to this case, the Court still finds it necessary to address the remaining issue on the supposed failure of the NCR Regional Director to exhaust administrative remedies. Montoya argues that the NCR Regional Director failed to exhaust administrative remedies when he appealed the 10 November 2003 Decision of DILG Secretary Lina directly to the CSC, without first filing an appeal with the Office of the President.

Under the doctrine of exhaustion of administrative remedies, before a party is allowed to seek the intervention of the court, it is a pre-condition that he should have availed himself of all the means of administrative processes afforded him. Hence, if a remedy within the administrative machinery can still be resorted to by giving the administrative officer concerned every opportunity to decide on a matter that comes within his jurisdiction, then such remedy should be exhausted first before court’s judicial power can be sought.³⁰ The administrative agency concerned is in the best position to correct any previous error committed in its forum.³¹

Montoya’s reliance on the doctrine of exhaustion of administrative remedies is misplaced, for said doctrine does not find application in the instant case. The doctrine intends to preclude premature resort from a quasi-judicial administrative body to the court. Such is not the situation in this case. Montoya is questioning the supposed premature resort of the NCR Regional Director from the decision of the DILG Secretary to the CSC, instead of to the Office of the President; obviously, he is challenging the resort from one administrative body to another.

Furthermore, Montoya’s assertion that DILG Secretary Lina’s decision should have first been appealed to the Office of the President before the CSC is baseless.

PNP personnel fall under the administrative control and supervision of the DILG,³² which, in turn, is under the administrative control and supervision of the CSC.

In Mendoza v. NAPOLCOM,³³ the Court settled that the one and only Philippine police force, the PNP, shall be civilian in character³⁴ and, consequently, falls under the civil service pursuant to Section 2(1), Article IX-B of the Constitution, which states:

Section 2. (1). The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters.

It is already explicitly provided in Section 45 of the DILG Act of 1990 that the decision of the Regional Director imposing upon a PNP member the administrative penalty of demotion or dismissal from the service is appealable to the RAB. From the RAB Decision, the aggrieved party may then appeal to the DILG Secretary.

Now the question is, from the DILG Secretary, where can the aggrieved party appeal?

In the event the DILG Secretary renders an unfavorable decision, his decision may be appealed to the CSC.³⁵

Section 91 of the DILG Act of 1990 provides:

SEC. 91. Application of Civil Service Laws. – The Civil Service Law and its implementing rules and regulations shall apply to all personnel of the Department [DILG].

Consequently, case law on administrative disciplinary proceedings under the Civil Service Law also applies to administrative disciplinary proceedings against PNP members. The Civil Service Law referred to in Section 91 of the DILG Act of 1990 is Subtitle A, Title I, Book V of the Administrative Code of 1987 (E.O. No. 292). Section 47 of Chapter 6 thereof provides, inter alia, that in cases where the decision rendered by a bureau or office (i.e., RAB of the PNP) is appealable to the Commission, the same may initially be appealed to the department (i.e., DILG) and finally to the Commission (i.e., CSC).³⁶

WHEREFORE, premises considered, the instant Petition for Review on Certiorari is GRANTED. The Decision dated 9 August 2007 and Resolution dated 18 October 2007 of the Court of Appeals in CA-G.R. SP No. 96022 are REVERSED and SET ASIDE. The Philippine National Police is ORDERED to reinstate petitioner PO2 Ruel C. Montoya to the police service without loss of seniority rights and with full payment of his salaries and backwages covering the period effective from the time of his dismissal from the service up to his reinstatement.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

REYNATO S. PUNO Chief Justice
LEONARDO A. QUISUMBING Associate Justice	CONSUELO YNARES-SANTIAGO Associate Justice
ANTONIO T. CARPIO Associate Justice	MA. ALICIA AUSTRIA-MARTINEZ Associate Justice
RENATO C. CORONA Associate Justice	CONCHITA CARPIO MORALES Associate Justice
ADOLFO S. AZCUNA Associate Justice	DANTE O. TINGA Associate Justice
PRESBITERO J. VELASCO, JR. Associate Justice	ANTONIO EDUARDO B. NACHURA Associate Justice
RUBEN T. REYES Associate Justice	TERESITA J. LEONARDO-DE CASTRO Associate Justice
ARTURO D. BRION Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.

REYNATO S. PUNO
Chief Justice

Footnotes
¹ Penned by Associate Justice Marlene Gonzales-Sison with Associate Justices Juan Q. Enriquez, Jr. and Vicente S.E. Veloso, concurring; rollo, pp. 90-106.
² Rollo, pp. 108-109.
³ Id. at 40.
⁴ Annex D.
⁵ Rollo, pp. 45-51.
⁶ RAB Case No. 2002-0088 SD; rollo, pp. 60-65.
⁷ Id. at 65.
⁸ SPO2 Enrique C. Paulino, SPO1 Rebecca P. Fernandez, SPO1 Donato L. Geda, PO2 Marlo S. Quiambao, PO3 Danilo de Leon Nuqui, SPO1 Cecilia Z. de Leon, SPO1 Alberto S. Mendoza and SPO1 Rodolfo C. de Leon.
⁹ Id.
¹⁰ The Order addressed all the appealed RAB-NCR decisions, but the Court shall only present herein the rulings particular to Montoya’s case.
¹¹ An Act Establishing the Philippine National Police Under a Reorganized Department of the Interior and Local Government, and for Other Purposes; RA 6975 was later on amended by RA 8551, approved on 25 February 1998 and published in newspapers on 5 March 1998.
¹² CA rollo, p. 316.
¹³ 366 Phil. 86 (1999).
¹⁴ Rollo, p. 105.
¹⁵ Montoya’s co-petitioners in CA-G.R. SP No. 96022 have a separate pending petition with this Court, docketed as G.R. No. 180063.
¹⁶ Civil Service Commission v. Lucas, 361 Phil. 486, 491 (1999).
¹⁷ Westmont Pharmaceuticals, Inc. v. Samaniego, G.R. Nos. 146653-54, 20 February 2006, 482 SCRA 611, 619.
¹⁸ Fabella v. Court of Appeals, 346 Phil. 940, 952-953 (1997).
¹⁹ National Power Corporation v. National Labor Relations Commission, 339 Phil. 89, 107 (1997); citing Philippine National Construction Corporation v. Ferrer-Calleja, G.R. No. L-80485, 11 November 1988, 167 SCRA 294, 301.
²⁰ Vda. de Emnas v. Emnas, 184 Phil. 419, 424 (1980).
²¹ State Prosecutors v. Muro, Adm. Matter No. RTJ-92-876, 19 September 1994, 236 SCRA 505, 522-523; see also Paulin v. Gimenez, G.R. No. 103323, 21 January 1993, 217 SCRA 386, 392.
²² Videogram Regulatory Board v. Court of Appeals, 332 Phil. 820, 828 (1996).
²³ Laresma v. Abellana, G.R. No. 140973, 11 November 2004, 442 SCRA 156, 169.
²⁴ People v. Bocar, G.R. No. L-27935, 16 August 1985, 138 SCRA 166, 171.
²⁵ Civil Service Commission v. Dacoycoy, supra note 13 at 104-105.
²⁶ G.R. No. 149999, 12 August 2005, 466 SCRA 624, 641-642.
²⁷ 378 Phil. 466, 483-484 (1999).
²⁸ G.R. No. 169982, 23 November 2007, 538 SCRA 534, 549.
²⁹ 338 Phil. 162, 171 (1997).
³⁰ Paat v. Court of Appeals, 334 Phil. 146, 152-153 (1997).
³¹ Id.
³² The PNP, as a bureau, is now a part of the reorganized DILG. (Cabada v. Alunan III, 329 Phil. 669 [1996].)
³³ G.R. No. 139658, 21 June 2005, 460 SCRA 399.
³⁴ Section 6, Article XVI of the Constitution provides:
Section 6. The State shall establish and maintain one police force, which shall be national in scope and civilian in character, to be administered and controlled by a national police commission. The authority of local executives over the police units in their jurisdiction shall be provided by law. ³⁵ Mendoza v. NAPOLCOM, supra note 33.
³⁶ Cabada v. Alunan, III, supra note 32.